The Securities and Exchange Commission and its court-appointed receivers frequently refuse to advance corporate funds to pay defense costs for individual corporate employee and officer defendants.

To the SEC, every dollar paid to a lawyer is one less dollar available for investors. Many individuals, however, do not have the resources to fund their own defense. Thus, by cutting off corporate advances, the SEC is in effect denying counsel. Judge Lewis Kaplan’s recent decision in the KPMG case provides a strong basis to challenge the SEC on the ground that its interference with corporate advances contravenes the Fifth and Sixth Amendments to the Constitution.